FIJI’S Micro, Small and Medium-sized Enterprises (MSMEs) will soon have their own dedicated climate risk financing program following the official announcement of a partnership between the Asian Development Bank (ADB), UN Capital Development Fund (UNCDF) and the UN Development Programme (UNDP) at the Grand Pacific Hotel in Suva yesterday.
The partnership will focus on creating a parametric insurance market for MSMEs that are threatened by extreme weather disruptions driven by climate change.
According to a joint statement, the partnership is supported through technical assistance from the Asia Pacific Climate Fund valued at $950,000 which will research the insurance landscape for MSMEs in Fiji and develop climate risk solutions while working with local insurance providers.
“This initiative builds on the work of the Pacific Insurance and Climate Adaptation Programme, which provides parametric insurance to vulnerable communities in the Pacific,” the statement noted.
UNDP Fiji Representative Munkhtuya Altangerel said there is a need for tailored insurance solutions to strengthen Fiji’s MSME sector against induced climate disasters.
“The initiative, led by ADB and UNDP and the UNCDF, aims to expand access to climate risk insurance for MSMEs and empowering our people to face the next climate event or natural disaster with confidence and have a safety net to help them recover with dignity, and speed,” Ms Altangerel said.
ADB deputy regional director Emma Allen expressed her gratitude towards the partnership, terming it as a timely step to enhancing climate risk financing for MSMEs in Fiji.
“Fiji, like many small island developing states, faces risks from climate and extreme weather events, its vulnerability to climate and geophysical risks pushes people into poverty, erodes physical buffers and contributes to higher cost business environment.
“So ADB’s multi-formed approach ensures strengthening resilience to climate shocks in Fiji,” Ms Allen said.
Parametric insurance is a form of index-based insurance that pays out when pre-agreed trigger conditions are met, such as rainfall thresholds or wind speeds. With simple rules and no need to prove losses, parametric insurance can help to insulate vulnerable communities from climate hazards by providing fast, pre-defined payouts.